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European equity bankers are not usually afraid of competition as they fight for business.

However, a new way of listing companies through competitive flotations that delay the appointment of bookrunners until a deal’s price range is set and first research is published has roused anger in Europe’s primary markets.

Detractors say competitive IPOs are a waste of time at best and at worst introduce potential conflicts. Those in favour say the method brings transparency into listing, and ensures banks deliver promised valuations.

Invented by John St John, then head of equity capital markets at Dresdner Kleinwort Wasserstein, the technique was first used on the Paris listing of French telephone directories company Pages Jaunes last year. St John claimed the system would ensure banks were held to the price they offered the seller, France Télécom.

Participating banks complained the method forced them to inundate fund managers with requests for feedback and put undue pressure on analysts to write favourable research to help their employer win the mandate.

DrKW and France Télécom insisted the system delivered what it promised. However, no seller used the method again and it appeared the competitive IPO would be a one-off.

The deal did little to help St John’s career and he was forced out of the bank in June.

However, nine months on, UK satellite company Inmarsat resurrected the method for its $738m (€617m) London listing in June. It short-listed nine banks to work on the deal, marketing the transaction to investors. In the event, bookrunner mandates went to four banks.

Inmarsat’s float was a success and this month two more competitive IPOs were completed – those of Belgian cable company Telenet and Swiss private bank EFG International.

The number will rise to three this week with the completion of French satellite operator Eutelsat’s €1.8bn ($2.1bn) listing in Paris on Tuesday. But the flurry has again polarised opinions on competitive IPOs. The head of equity syndicate at a bulge-bracket European bank said: “This process is a cretinous waste of time. I challenge anyone to produce empirical data that supports the validity of the method.”

One UK institutional fund manager with 30 years’ experience said he saw no benefit for sellers. “Brokers are expecting a lot more time with institutions and at the end of the day the result is no different from a standard IPO.”

Bankers also complained that a competitive IPO could mean a fund manager was contacted up to 40 times in connection with the deal.

Not all equity bankers dislike the method and Lehman Brothers and Merrill Lynch have won bookrunner slots on all the floats that have used it this year. Lehman was also a bookrunner for Pages Jaunes.

The head of European equity capital markets at a US bank said: “The key advantage to a seller is that it minimises the risk of underpricing a deal. There is also much more transparency in the process as sellers are able to see line-by-line feedback on what investors think.”

This claim is supported by this year’s aftermarket performance of European IPOs in which shares in the average float rose 29.5% on their first day and by 28.4% after a week of trading, according to investment banking data provider Dealogic. Share prices of this year’s competitive IPOs increased by an average of 7.26% on their first day and by only1.38% after a week.

Private equity industry sources said competitive floats had proved their efficacy. Others warned a deal might be allowed to collapse to discredit the system. Eutelsat’s pricing may answer some questions.